Damstra Holdings Limited (ASX:DTC) just released its latest annual report and things are not looking great. It was a pretty negative result overall, with revenues of AU$31m missing analyst predictions by 2.1%. Worse, the business reported a statutory loss of AU$0.29 per share, much larger than the analysts had forecast prior to the result. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Damstra Holdings' four analysts are now forecasting revenues of AU$35.4m in 2023. This would be a solid 16% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 86% to AU$0.036. Before this latest report, the consensus had been expecting revenues of AU$37.3m and AU$0.025 per share in losses. While this year's revenue estimates dropped there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target fell 7.3% to AU$0.31, implicitly signalling that lower earnings per share are a leading indicator for Damstra Holdings' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Damstra Holdings analyst has a price target of AU$0.46 per share, while the most pessimistic values it at AU$0.20. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Damstra Holdings' revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2023 being well below the historical 22% p.a. growth over the last five years. Compare this to the 112 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. Factoring in the forecast slowdown in growth, it looks like Damstra Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Damstra Holdings' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Damstra Holdings going out to 2025, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Damstra Holdings (1 is potentially serious) you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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